For many years, directors (and other executive officers) have faced deemed liability under Queensland Law, whereby if a corporation commits an offence, an executive officer is deemed to have committed the offence of failing to ensure the corporation complies with the relevant Act ("Deemed Liability"). From 1 November, this will change. Below, we examine how some key resources and other legislation will be impacted by the change.
On 29 October 2013 the Directors' Liability Reform Amendment Act 2013 (Qld) ("Act") was passed, and took effect from 1 November. The Act amends a broad range of Queensland laws which previously subjected executive officers (including directors) to Deemed Liability.
The original version of the Bill introduced in 2012 has been heavily amended in response to criticisms that it did not achieve the goal of reducing the compliance burden placed on executive officers.
The Act significantly reduces the potential for exposure to liability via the removal of Deemed Liability under certain laws. However, from November 1, there will be at least four different types of directors' liability across State laws:
- some laws such as the Environmental Protection Act 1994 (Qld) and Sustainable Planning Act 2009 (Qld) will retain the old form Deemed Liability regime;
- the Work health and Safety Act 2011 (Qld) will continue to impose positive obligations on executive officers to conduct due diligence into the compliance of their company for health and safety matters (and a reflective liability); and
- two new types of directors liability are introduced, a 'Type 1' offence and a new deemed liability offence.
How do the new liability provisions work under resource laws?
From 1 November 2013, the Mineral Resources Act 1989 (Qld) will have two different executive officer liability offences:
- a 'Type 1' offence, under which the prosecution must prove that the executive officer failed to take reasonable steps to prevent the offence occurring; and
- a new 'deemed liability' offence, that, for example, applies when the director authorised or permitted the offence.
The new liability provisions above will not apply to all offences, only specific 'executive liability provisions'. For example, under the Petroleum and Gas (Production and Safety) Act 2004 (Qld), these include:
- designer/importer/manufacturer/supplier obligations to ensure that equipment meets statutory safety requirements;
- ensuring that only approved gas devices are installed;
- ensuring that all petroleum activities are authorised by a petroleum authority (eg. a petroleum lease); and
- ensuring that no false or misleading information is provided under the statute.
Each statute containing the new liability provisions identifies the specific offences that the executive officer liability applies to. This differs from the previous Deemed Liability regime which applies to any offence that occurs under the relevant statute. Therefore, if you want to know what actions attract executive officer liability under a specific statute, you must specifically review the relevant statute to identify the particular offences.
Importantly, the amendments expressly provide that an executive officer can be convicted under a new executive liability provision, even where the corporation itself is not convicted of a related offence.
Will the laws achieve their objective?
Whilst the potential liability of executive officers has been reduced by the Act, it remains to be seen if the compliance burden will lessen given that in any one particular situation a number of different liability provisions can apply to any one set of facts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.